Is Now the Time to Invest in Commercial Real Estate in Los Gatos?

Why Los Gatos Is Always on Investors’ Radar

If you’ve lived in Los Gatos long enough, you know it’s a special kind of place. Great schools, charming downtown, and a thriving local economy supported by both small businesses and Silicon Valley spillover. As commercial real estate brokers based right here in town, we’ve had a front-row seat to how this community has evolved over the years and how it continues to attract serious commercial real estate interest.

But let’s get to the real question: Is now the right time to invest in commercial property here in Los Gatos?

Short answer? It depends on your goals, but in many ways, yes. And in this article, we’ll break down exactly why.

What Makes Los Gatos a Unique Commercial Market?

A Limited Supply of Commercial Space

Unlike major cities like San Jose or Oakland, Los Gatos has a very limited amount of commercial inventory. There’s just not a lot of land zoned for retail, office, or mixed-use development, which makes every square foot of commercial property here more valuable.

High-Income Demographics and Steady Demand

The average household income in Los Gatos is among the highest in Santa Clara County, which supports a strong retail and service economy. People here shop local, dine out often, and value boutique, high-end services, which in turn keep commercial spaces in high demand, especially in walkable zones like North Santa Cruz Avenue and Old Town.

Where Are We in the Market Cycle?

What's Happening Now (2024–2025)

Let’s talk about market timing—something every investor wants to get right. As of now:

Cap rates in Los Gatos are still compressing, meaning demand is outpacing supply for quality commercial properties.
Office space is being reimagined, not abandoned. We’re seeing a lot of interest in adaptive reuse and creative spaces for small firms, wellness brands, and tech consultancies.
Retail is evolving, but well-located properties are thriving, especially those near restaurants, coffee shops, and community gathering spots.
Interest rates are holding investors back slightly, but savvy buyers with equity or 1031 proceeds are taking advantage of less competition.

In short, we’re in a more balanced (and less frenzied) market, which can be a great time to buy, especially if you’re playing the long game.

Who Should Be Thinking About Investing Right Now?

Retiring Property Owners

We talk to a lot of local owners who’ve managed their properties for decades. They’re tired of tenant calls, repairs, and rising operating costs. For many, it’s time to transition into passive income with NNN leases or sell and downsize via a 1031 exchange.

Local Business Owners

If you’ve been leasing for years and want to stop paying someone else’s mortgage, owner-user properties are a great path to building wealth. SBA loans can help you secure your own space with as little as 10% down.

First-Time Commercial Investors

We love working with residential investors making their first leap into commercial. The returns can be better, and with the right guidance, the process is smoother than you might expect. It’s all about understanding lease structures, tenant mix, and asset performance.

What Kinds of Opportunities Are Available?

Downtown Retail & Boutique Storefronts

These remain highly sought-after. If you see a vacant space, chances are there’s already a waiting list of tenants trying to move in.

Small Office Buildings or Medical Suites

Medical and wellness tenants are still very active. These buildings are great for NNN transitions or repositioning for flexible uses.

Mixed-Use and Redevelopment Projects

Older buildings with upstairs residential and downstairs retail? That’s gold. With the right updates (and sometimes rezoning), these can generate strong returns and add value to the neighborhood.

Passive Investments Through 1031

Not every great property is here in Los Gatos, but many of our clients use 1031 exchanges to sell locally and reinvest in NNN properties across the country. We handle the sale, identify the replacement property, and ensure a smooth exchange.

What Should You Watch Out For?

Even in a strong market like Los Gatos, it’s important to do your homework. Here are a few things we always flag for clients:

Zoning restrictions and change-of-use limitations
High tenant turnover in older buildings
Maintenance and capital expenditure risks
Overpaying due to emotional ties or inflated comps

The good news? With a local broker who knows the area block by block, you can navigate these issues easily.

How The Calvillo Group Helps You Invest Smarter

We’ve lived and worked in Los Gatos for years. Our job isn’t just to find you a property, it’s to help you:

Understand the numbers (cap rates, cash flow, ROI)
Strategize your next move (1031, NNN, value-add, or long-term hold)
Connect you with off-market deals before anyone else sees them
Coordinate your sale, exchange, and reinvestment with zero stress

We pride ourselves on being trusted advisors, not just brokers. Our clients come back because they know we’re thinking long-term, just like they are.

So… Is It the Right Time to Invest?

Here’s our honest answer: If you’re prepared, strategic, and thinking long-term, yes, it’s a great time. There’s less competition, more flexibility in negotiations, and the ability to plan your investment based on facts, not fear or frenzy.

But if you’re unsure, or if the timing isn’t right for you yet, let’s talk anyway. We’ll share what we’re seeing, give you honest feedback, and help you build a plan even if your move is still 6–12 months out.

Let’s Talk About Your Investment Goals

At The Calvillo Group, we help Los Gatos locals and South Bay investors take the next step with confidence. Whether you’re buying, selling, exchanging, or just curious, we’d love to hear from you.

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